Loretta Mester Says Fed Doesn't Want to Surprise Markets

The transcript discusses the challenges of economic forecasting, highlighting the uncertainties and wide error bands in predictions related to growth, inflation, and unemployment. It emphasizes the need for transparency in policy-making and the importance of not being deterred by uncertainty. The labor market is examined, noting the impact of demographics, technological changes, and globalization. The need for effective worker training programs is stressed. Finally, the transcript touches on market expectations and the importance of clear communication from the Fed to avoid surprises.

What is a key challenge in economic forecasting mentioned in the video?

• Accurate unemployment rate prediction

• Wide error bands around forecasts

• Narrow error bands around forecasts

• Predicting exact GDP growth

What factor is contributing to the lower equilibrium employment growth in the US?

• Higher education levels

• Technological advancements

• Demographic changes

• Increased immigration

How has globalization affected the US labor market according to the video?

• Increased job opportunities

• Reduced technological changes

• Higher wage growth

• Some jobs are no longer economical

What is the Fed's approach to communicating its policy path to the market?

• Keeping it confidential

• Ignoring market expectations

• Surprising the market

• Being as transparent as possible

What is the market's expectation for a potential interest rate hike in March?

• 50%

• 75%

• 36%

• 25%